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Financing

What is the Processing Fee for?

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What is the Processing Fee for?

When you order a True Built Home and you sign the contract, you are asked for a processing fee. This processing fee is for administrative costs that True Built Home incurs well before we ever pour foundation. When you sign your order, we immediately begin working.

The work that our office staff does includes, but is not limited to:

  • Processing your contract
  • Preparing your blueprints *(See Below)
  • Standard Engineering of the home
  • Getting bids from subcontractors
  • The salary of the salesperson who helped you
  • Helping you with any information you need for your permit application and loan application. Taking your permit to the county and paying fees is the responsibility of client.

So as you can see, we begin performing services for you immediately on signing of your contract. For this reason our processing fee is non-refundable. You might be asking how much might the fee be? Our fee can be as low as $1,700 for garage plans and can get as high as $5,500 if you are doing a non True Built Home plan. Normally you might realistically be looking at between $3,000-5,000.

*The standard processing fee covers the blueprints if the plan is stock with no redrawing of the house plan. If your house plan is being redrawn for you and deviates from the stock plan that you see on our website, then there will be an additional redraw fee. As mentioned earlier that fee normally never exceeds $5,500.

Show Me The Equity!

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Why build a new home? Lots of reasons. Take an example of one family here in Pierce County, Washington State. Right before the crash in the latter parts of 2007/8 a True Built Home family was putting the finishing touches on a large rambler. At the time it appraised for over $500k. As the market collapsed, so did their “equity” in their home/investment. They recently refinanced to take advantage of historical low rates and it recently appraised for $420k. They lost nearly $100k in value. Now, how much equity do they still have? The houses’ original construction loan was 326k. So Read More

Checklist For Obtaining A Construction Loan

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We are often asked what is all need to obtain a construction loan. While every lender is a bit unique, some very general items listed here are pretty standard. If you find someone who is a “hard money lender”, there may be additional items to note. Again, here is a general list of items that most lender require.

FINANCIAL INFORMATION:

  • Personal financial statement {Application}
  • Pay stubs for the previous 30 day period
  • Prior two years tax returns {With W-2’s}
  • Last two months account statements {Checking, savings, stock & bond}
  • Prequalification letter {For long term financing}
  • Self employed borrowers with {Corporations, partnerships, LLC’s, LLP’s}( Business tax returns for the previous two years)( Current balance sheet and profit and loss statement)

DISCLOSURE AND AUTHORIZATION:

  • Authorization to obtain credit information

For a list of our lenders click here. Lenders on our list have already approved us to loans with their institutions. If you have a lender you want to do your construction loan with, let us know and we will do what we can to become approved with them.

Do You Work with VA Loans?

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YES WE DO! We include the financing for the land and home in the same loan. To get highly educated about these types of loans, please contact our VA mortgage loan officer, Blake Hanson. MLS 124591

There are 7 active military bases in Washington State: Fairchild AFB in Spokane, McChord AFB/Fort Lewis near Tacoma, and Navy bases at Whidbey Island, Everett, Bremerton, and Silverdale Washington. In addition, a number of people retiring from the military choose the Pacific Northwest to land. It’s understandable then that a common question that on your lot Home Builders throughout Washington and Oregon hear is “Do you work with VA loans?” The short answer is maybe. To understand this answer it is important to understand that in construction there are actually two loans: the short-term construction loan, and then after construction is complete the loan is converted (in essence refinanced) to a 30-year mortgage.

Some first-time homebuyers are misinformed as to how a VA Loan works. The Veterans Administration does not normally actually provide the money for the loan. What the VA does is guarantee a loan for a veteran of military service.

The VA loan began in 1944 as a way of helping US servicemen coming back from war to get loans to buy home. It provided veterans with a federally guaranteed home with no down payment. This feature was designed to provide housing and assistance for veterans and their families, and the dream of home ownership became a reality for millions of veterans.

In most cases, the VA guarantees loans for vets who meet certain requirements, such as a good credit rating.  Also, it’s important to note that the VA only guarantees the loan if the veteran has the income to handle house payments. A VA loan guarantee is not an automatic benefit.

The loan itself is made by a private lender, such as banks, savings & loan institution, or mortgage companies, and the loan must be for owner occupancy. The guarantee means the lender is protected if you or a later owner fails to repay the loan. The guarantee replaces the protection the lender normally receives (i.e. no PMI) by requiring a down payment allowing you to get better financing terms than you might find otherwise.

But there are several clauses that may make a VA loan difficult in a construction loan. Your best bet would be to check with a lender who does construction loans near you. Please see our  Lender List.

Common Loan Application Requirements

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Following is a list of commonly requested items that your lender may require for your loan application. Please bear in mind that different lenders have different requirements and your lender may have additional or in some cases fewer requirements than these.

GENERAL

Most banks will charge you about $25 to run a credit report.
Account numbers and balances for all bank accounts, credit unions, brokerage accounts and retirement account; plus most recent two months statements on all
accounts (sometimes 6 months may be required)
Copy of Life Insurance policies
Statements of stocks & bonds

INCOME

Past two years employment history, completes with addresses, dates from-to, positions held and monthly income
Most recent months pay-stubs and past two years W-2 forms
Verification of any other income (Social security, disability, child support, pensions, retirement, etc)
If self employed: past two years personal and business tax returns including all schedules plus a profit and loss statement and balance sheet for the current year.
Rental income: Copy of lease or rental agreement. If not currently rented, what is
expected?

CREDITORS

Schedule of real estate owned if you own more than three properties
Amount of child support paid and copy of decree of dissolution with order of child support
Bankruptcy and/or adverse credit: Provide copy of discharge and schedule of creditors
Name, Address and phone number of current landlord

MISCELLANEOUS IF APPLICABLE

Copy of divorce decree
Copy of green card if not a US Citizen
Name and phone number of person in charge of Community Water/Home Owners Assn.

Improve Your Credit

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How to Repair Your Credit

No matter how bad your credit situation is there are always steps you can take to make it better. Everyone’s situation is unique, so what might be the best thing for you right now, may not be the best thing for someone else.

To repair your bad credit, you must find a starting point. The best way to do that is to obtain a copy of your credit reports from the 3 major credit reporting agencies, also known as credit bureaus. You will also need to know what your credit scores are. Once you have your reports, you’ll want to make sure all the information is accurate. There are mistakes in about 80% of all credit reports. If you find any accounts that you are unfamiliar with or are reporting incorrectly you should dispute them with the credit bureaus.

Creditors are notorious for reporting erroneous information on your credit reports. So, even if it’s just a small error; that gives you the right to dispute it. It’s important to note that whether the account is actually yours or not makes no difference on their responsibility to verify it. If the account can’t be verified, it must be deleted. The credit bureaus get thousands of disputes each day and many times they don’t do a very careful job of investigating items you’ve disputed. So, it may take a few rounds of letters until the credit bureaus remove the negative information. Be patient and wait at least 30-35 days before sending another round. Do not give up. It may seem like just one or two small errors that they are falsely reporting about you – no big deal, right? Wrong! Just one error can cause your credit scores to suffer immensely and could end up costing you thousands of dollars. This is very serious business. It’s extremely important to make sure everything on your credit reports is being reported correctly.

Another thing you should do is pay off the most recent past due accounts. Be careful making payments on older charged off accounts as paying them could possibly bring your scores down even further which means they can report the negative account for 7 more years.

You will also want to try to get an agreement with the creditor to update it to “paid as agreed” or remove the account BEFORE you pay it. It’s much harder to get it updated or removed after you pay it because you don’t have much leverage.

Another important part of raising your credit scores is to keep your existing balances below 30-40% of your credit limit. You’ll also want to minimize the number of inquiries you make by not applying for credit unless you absolutely must. Use your inquiries wisely and sparingly, as applying for too much credit in a short amount of time can be very damaging to your credit scores.

Financing

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Unlike an existing home or manufactured home purchase, there are actually usually two loans involved in building a stick-built home:

  1. a short term construction loan (usually 9 to 12 month)
  2. the permanent 30 year mortgage

If you’ve never built a home before, you might find the construction loan to be somewhat confusing. This article is to help you understand some of the differences between a construction loan and a home mortgage.

A “STORY” LOAN

Construction loans are considered to be ‘story’ loans. What this means is that you are in essence purchasing an idea, or a concept. Since the object that the lender is investing their money on is not tangible (i.e. it doesn’t exist yet) they must know the ‘story’ behind your concept and the story must make financial sense to them before they will be willing to loan you the money and make your concept become a reality . So your job (and ours) will be to make the story interesting to the bank.

One of the things that makes the loan make sense to the lender is the high equity of a brand new stick built home. Because the True Built Home building process saves you as the home owner a lot of money, once the house is done, you will typically move into the home with instant equity. This makes the loan make sense to the bank since they know that they can easily recoup their investment no matter what happens.

FINANCING STICK BUILT VS MANUFACTURED HOMES

At this point, it’s worth pointing out one major advantage to building a stick built home over purchasing a manufactured or mobile home: financing is much easier on a stick built home, because the story makes more sense then lending on a manufactured home. In fact, because mobile and manufactured homes do not accumulate the amount of equity that you will find in a stick built home, banks are growing increasingly hesitant to finance them at all and when they do the terms are often not nearly as desirable as a stick-built home. The reason is that, if you default on the loan, the bank has less of a chance of reselling a mobile or manufactured home as they would a stick built home. So the story of a stick-built home makes more sense than the story of a manufactured home

HOW CONSTRUCTION LOANS WORK

A construction loan is basically like a line of credit. Like a credit card, you are approved to spend up to a certain amount of money to build your new home. Construction loans typically require interest-only payments during construction and become due upon completion (meaning that the house has received its certificate of occupancy). The balance due is then rolled over or ‘converted’ into a typical 30 year mortgage.

Construction loans usually have a higher interest rate than the permanent loan will have-often as much as 7-9%. However, the payments will be lower because you are paying interest only and only on whatever amount you have actually charged against the loan.
At the start of construction, your initial payments on the construction loan will likely be low-just the interest payment on the cost of the land. As you begin work to develop the land, such as excavation, utilities, and other site improvements, you take draws against your loan and your balance begins to grow. Then once construction starts, the home builder takes draws against the loan for materials and labor to build the home. As you continue to take out draws against your ‘credit line’ your payments will increase until you reach the end of construction.

It is possible but not desirable to have a construction loan independent of the final permanent 30 year loan. It is much safer for you to have a combined construction to permanent loan. With this type of loan, once the house receives Certificate of Occupancy, the construction loan is automatically converted to a permanent mortgage loan. The advantage of this is that you only have to have one application and one closing, so you only pay closings costs once. This is known as a ‘one step’ construction loan.
If you thought home ownership was out of reach or you needed a large amount of money to buy a home, think again.

List of True Built Lenders

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Looking for the right lender for your situation can be a confusing and daunting process. At True Built Home, we want to make this process as convenient and effortless as we can. Please find a list of our preferred lenders below who can help you with the loan process.

Tacoma and Western Washington

Below are lenders available to help our clients on the west side of the mountains.

Umpqua Bank

Terry S. Pemberton-Read more about Terry, his history and a little about construction loans. Click Here!
Home Lending Officer NMLS ID 185396
Direct: 360-280-4208
Fax: 888-977-9408
Email: terrypemberton@umpquabank.com
Web: www.umpquabank.com/tpemberton

Terry can serve all of True Built Home’s locations and branches.

Why choose Umpqua Bank and Terry Pemberton?

5% down on a construction loan is pretty incredible. Along with the earnest money you use to put down on new land, and our processing payment when you order and or design your home, can all be applied to the 5%. Next, Terry S. Pemberton has been doing these loans so long he can do them in his sleep. He can also do them state wide and via email.

Washington Federal

Joni Cross
VP & Branch Manager
13414 Meridian Ave E, Bldg B, Ste 105
Puyallup, WA 98373
Office: 253-840-3493
Email: joni.cross@wafd.com

Why choose WaFed? Washington Federal has been in business since 1917, has a strong community presence and also does loans across the state and many state boarders.

Timberland Bank

William (Bill) P. Andrews
Vice President, Branch Manager NMLS ID 539564
Office: 253-875-4250
Toll Free: 1-800-562-8761
Fax: 253-875-8702
Email: wpandrews@timberlandbank.com
Bill and the owner of True Built Home go all the way back to the 1990’s He’ll take great care of you.

Why choose Timberland? The All-in-One Construction Loan provides up to 12 months of interest only payments through the construction phase, then converts to permanent financing up to 80% loan-to-value. The permanent rate is locked before construction begins. In addition, the two-step construction loan provides financing for loans that exceed 80% loan-to-value. You pay interest only during the construction phase as funds are used. The construction term is 12 months. Your loan officer will assist you with converting to permanent financing.

Evergreen Home Loans

Evergreen

Shawn Lynch

mailto:slynch@evergreenhomeloans.com

310 29th Street NE Suite 201 Puyallup, WA 98372
tel (253) 222-5626 fax (844) 513-0088 direct (253) 268-4050

Evergreen apply online

 

Tri-Cities, Spokane, and Eastern Washington

Below are lenders available to help our clients on the east side of the mountains.

Mountain West Bank

Robert Howard
12321 E. Mission
Spokane Valley, WA, 99216
Phone: 509-944-4025
Mobile: 509-998-3636
Fax: 509-944-4090
Email: rhoward@mountainwestbank.com
Robert originates loans for our Spokane office

Northwest Farm Credit Services

Daniel R Huff
Manager, Community Lending
Office: 509-836-3088
Web: Northwest Farm Credit Services

Evergreen Home Loans

Shawn Flinders
Branch Manager & Senior Loan Officer
1030 North Center Pkwy., Suite 304
Kennewick, WA 99336
Phone: 509-579-3601
Fax: (844) 417-4410
Email: sflinders@evergreenhomeloans.com
Shawn does loans for our Tri-Cities office

 

About The Construction Lending Process

We would like to take the time to educate our clients here about the lending process.

Before what many are calling the “greater recession” several local and national lenders were willing to lend construction loan money on the pre-construction appraised value. As an example; Mr. and Mrs. Jones find a parcel of land, pick out a True Built Home, get estimates for owner items and presents everything to the lender. The lender, after receiving the builder packet, (that’s the contract, blueprints and description of materials from True Built Home) does a pre-construction appraisal to determine the home’s value. In the vast majority of cases, the home always appraised far above the actual cost. Many lenders would then give anywhere between 80% and up to 100% of the appraised value. In another words, if the projects projected cost was $180k, and the appraised value was $245k, they would give the percentage mentioned earlier based upon the appraised value. Often, if the client was credit worthy, they could take the cash out if they so desired. We know what that led to!

What has changed? Many of the lenders listed above  will do this scenario only if the client has owned or made payments (called “seasoned”) on the land for over a year. The banks can then use the equity in the property as a down payment on the construction loan. A few of the banks below require that anywhere from 5-20% of the estimated cost of construction still be put towards the purchase of the new home.

The catastrophe in the banking industry adversely affects pretty much every single type of loan there is. However, why are people still building homes from True Built?

  • Building with True Built Home is still the best way to jump start equity in your home.
  • With the quality of products and our “Different by Design” philosophy approach do building our homes, our clients will enjoy maintenance free living for years and will have a modern plan that will remain functional for your lifetime.
  • You can enjoy the flexibility of your taste your way.
  • With built-in equity, you’ll likely never be “upside down” like some of our friends, family, and neighbors.
  • When you have an active part in your home you will not believe the excitement of seeing your home go up. It truly is an experience of a lifetime.

We hope here at True Built Home as a staff, sub-contractors and vendors that you will be added to a long list of success stories, proud owners and financially better off folks as a result of having discovered that owning new is simply a wiser choice to be had by the few.